Holding

The Court upheld the validity of the first proviso of Rule 19A as a permissible differentiation, but struck down Rules 8D and 19B as beyond the State's rule‑making power under Section 15.

Summary

The State of Tamil Nadu appealed against a Madras High Court order that struck down Rules 8D, 19B and part of Rule 19A of the Tamil Nadu Minor Mineral Concession Rules, 1959. The State argued that giving preference to State Government companies or corporations in granting quarrying leases for certain granites was a valid differentiation aligned with the object of the Mines and Minerals (Regulation and Development) Act, 1957. The respondents contended that the first proviso of Rule 19A was arbitrary, lacked guidelines, violated Section 17A(2) and the principle of promissory estoppel, and that Rules 8D and 19B unlawfully regulated the sale and price of granite after extraction. The Supreme Court held that the preference provision in Rule 19A is constitutionally valid and does not circumvent Section 17A(2), but the State lacks authority under Section 15 to control post‑extraction sale or fix minimum prices, rendering Rules 8D and 19B ultra vires. Consequently, the High Court’s decision striking down Rule 19A was set aside, while its ruling on Rules 8D and 19B was affirmed.

Issues considered

Whether the first proviso of Rule 19A giving preference to State Government companies or corporations is arbitrary or ultra vires.
Whether the preference provision contravenes Section 17A(2) of the Mines and Minerals (Regulation and Development) Act, 1957.
Whether the State Government has power under Section 15 to regulate the sale and fix minimum price of granite after it has been quarried (Rule 19B).
Whether Rules 8D and 19B fall within the rule‑making competence of the State under the Act.
Whether consent of the landowner is a condition for granting a quarrying lease under Rule 19A.
Whether the principle of promissory estoppel applies to the amendment of Rule 19A.

Legislation cited

Mines and Minerals (Regulation and Development) Act, 1957s. 15, s. 15(o), s. 17A(2), s. 18, s. 2, s. 24A

Subjects

mineral concessionsrule making powerpreference to state companiesgranite miningconstitutional validityultra viresSection 15Section 17A(2)promissory estoppel

Judgment

STATE OF TAMIL NADU A
v.
M.P.P. KA VERY CHETTY

JANUARY 19, 1995

[J.S. VERMA, S.P. BHARUCHA AND K.S. PARIPOORNAN, JJ.] B

Mines and Minerals (Regulation and DevelOpment) Act, 1957-Tamil
Nadu Minor Mineral Concession Rules, 195<>-Rule 19A, amended by
Government Order No. 214 dated 10th June, 1992, First proviso-<iranite
quarrying lease-<Jiving preference to State Government companies or cor- C
poration-Whether arbitrary-Held, No-Valid differentia exists between State
Government companies and corporations and private miners-First proviso
to Rule 19A cannot be said to circumvent provisions of Sec. 17A(2).

Rules BD and 19B-Constitutional validity-Rules quashed as being
beyond the purview of rule making power of State Government. D
Rules SD and 19B and first proviso of Rule 19A of the Tamil Nadu
Minor Mineral Concession Rules, 1959 made under the provisions of the
Mines and Minerals (Regulation and Development) Act, 1957, were chal-
lenged. They were struck down by the High· Court as unconstitutional. The E
Government Orders by which these provisions were introduced into the
said Rules were also quashed in part.· The High Court found that the first
proviso in Rule 19A did not contain any guideline in the matter of giving
preference to a State Government company or corporation. The grant of
preference was left to the unfettered discretion of the State Government.
It was, therefore, held ultra vires the constitution. The High Court quashed F
Rules SD and 19B principally on the ground that Section 15 of the said
Act gave no power to the State Government to frame rules to regulate
internal or foreign trade in granite after it had been quarried. Section 15
also did not empower the State Government to frame rules to enable a
State Government company or corporation to fix a minimum price for G
granite. These appeals had been filed by the State of Tamil Nadu challeng-
ing the judgment and order of the High Court.

The appellants submitted that valid differentia existed between State
Government companies and corporations on the one hand and private
miners on the other and it bore close nexus to the object of the said Act. H
441
y
I

442 SUPREME COURT REPORTS [1995) 1 S.C.R.
/ -
A The State contended that Rules SD and 198 were valid h_aving regard to
the Preamble of the said Act and Section lS thereof. It was submitted that
the rule making power of the State u/s 15(o) was wide enough to encompass
Rules SD and 198.

The respondents submitted that the Rules should have provided
B guidelines for the State Government company or corporation. It was
submitted that Rule 19A ·as amended had no nexus to the objects stated
in G.O. No. 214. It was detrimental to persons who had set up polishing
units on the basis of the policy declared under Rule 19-A as it stood before
10th June, 1992. The amendment of Rule 19-A was challenged as arbitrary
C and, applying also the principle of promissory estoppel, ought to be struck
down. The respondents submitted that under the first proviso of Rule 19A
the consent of the owner of the land was not made a condition and it was
bad on that account. The provisions of section 17A(2) of the Act were
adverted to and it was submitted that they were being circumvented by the
first proviso of Rule 19A.
D
Disposing of the matter, this Court

HELD: 1.1. Valid differntia exists between State Government com-
panies and corporations on the one hand and private miners on the other
and it bears close nexus to the object of the Mines and Minerals (Regula-
E tion and Development) Act, 1957. With the object of conserving a rare and
precious mineral and ensuring its exploitation in the best possible manner,
it is open to the State Government, the Rule making authority in respect of
minor minerals u/s 15 of the Act, to keep mining operations in granite of
own
the kind specified in the amended Rule 19-A, so far as is possible, in its
p hands, and to do this by giving preference in the grant of quarrying leases
for such granite to State Government companies or corporations.
[44S-B, 449-A-B]
1.2. Consent of the occupier is required only when the holder of the
lease desires entry into any building or enclosed court or garden. Therefore,
G Rule 19A cannot be.held bad in law only because consent of the owner of
the land was not made~ condition. [451-8, 450-H]

1.3. Section 17A(2) applied when an area is sought to be reserved, by
the State Government for undertaking mining operations exclusively
through a Government company or corporation. When such area is
H notified the mineral or minerals in respect of which it is notified must also
STATEv. M.P.P.KAVERYCHETTY[BHARUCHA,J.] 443

be stated. Such reservation cannot be made without the approval of the A
Central Government. The first proviso of Rule 19A does not wholly exclude .
private parties from obtaining quarrying leases for the minerals specified
therein. It states that for such leases preference shall be given to State
Government companies and corporations. Where, therefore, there are, for
the same mining lease for the specified mineral, rival applications, all
things being equal having regard to the requirements of Rule 3 and of the
B
form at Appendix X, a State Government company or corporation is to be
preferred. The first proviso to Rule 19A cannot, therefore, be said to
circumvent the provisions of section 17A(2). [451-F-G]

2. There is no power conferred upon the State Government under C
the said Act to exercise control over miner minerals after they have been
excavated. The power of the State Government, as. the subordinate rule
making authority, is restricted in the manner set out in Section 15. The
power to control the sale and the sale price of a miner mineral is not
covered by the terms of clause (o) of sub-section (lA) of Section 15. This
clause can relate only to the regulation of the grant of quarry and mining D
leases and other mineral concessions and it does not confer the power to
regulate the sale of already mined minerals. [454-G-H]

The High Court was clearly right in striking down Rules SD and 19B
as being beyond the purview of the rule making power of the State Govern- E
ment. [455-A]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1655 of
1993 etc. etc.

From the Judgment and Order dated 23.12.92 of the Madras High F
Court in W.P. No. 8277 of 1992.

P.R. Seetharaman, V. Balachandran, V. Krishnamurthy, K.K. Mani,
Ms. Indu Malhotra, Ganpati Iyer Gopal Krishnan, K. Ram Kumar, Pravir
Choudhary, L.P . Agrawalla, R. Mohan, yv.c. Chopra, P.N. Ramalingam,
S.R. Setia, Aruneshwar Gupta, Prabirananda Chowdhary, Surya Kant, K.V. G
Mohan, R. Ayyam Peruman, E.C. Agrawala, A. Mariarputham and K.
Rajendra Chowdhary for the appearing parties.

The Judgment of the Court was delivered by

BHARUCHA, J. Leave granted. H
444 SUPREME COURT REPORTS [1995] 1 S.C.R.

A ·In these appeals the State of Tamil Nadu impugns the judgment and
order dated 23rd December, 1992 of a Division Bench of the High Couit
at Madras whereby Rules 8D and 198 and a part of Rule 19A of the Tamil
Nadu Miner Mineral Concession Rules, 1959, ("the said Rules") made
under the provisions of the Mines & Minerals (Regulation & Develop-
B ment) Act, 1957, ("the said Act") were struck down as unconstitutional. The
Government Orders by which these provisions were introduced into the
said Rules were also quashed in part. A direction was issued to the
appellant State to permit the respondents herein, being the petitioners
upon whose writ petitions the judgments and orders were passed, to carry
on quarrying operations and transport the rµaterial quarried without refer-
C ence the aforementioned Rules, subject to the payment of royalty and
seigniorage.

Rule 19A.
;~

Prior to 10th June, 1992, Rule 19-A read thus :
D
"19-A Permission for quarrying black, pink, red, grey, gieen and
other coloured granites and any other rock required for use for
decorative and ornamental purposes in ryotwari lands :-

(1) Notwithstanding anything to the contrary contained in Section
E III to these rules the authority competent tO grant permission for
quarrying black, pink, red, grey, green and other coloured granites
and other rock required for use for decorative and ornamental
purposes in ryotwari lands shall be the State Government. The
application shall be in the form specified in Appendix III to these
rules:
F
Provided that the quarrying permission fot· the nunerals above in
ryotwari lands shall be granted only to an applicant who is having
an,.existing industry in Tamil Nadu or distinct industrial programme
to use the mineral in his proposed industry in Tamil Nadu :
G Provided further that the permission holder for quarrying the
above mineral shall remove or transport the mineral from the
specified land after payment of area assessment, seigniorage, rates """·
prescribed form time to time in Appendix II to these rules and
after obtaining transport permit from the District Collector or the
H Officer authorised by him in the behalf;
STATEv. M.P.P. KAVERYCHETTY[BHARUCHA,J.] 445

Provided also that the transport permit shall be issued only to the A
industry for which the mineral is required to be supplied. The
lessee shall keep correct accounts showing the quantity and other
particulars of all minerals obtained at the factory site and
despatched from the factory. The lessee shall also allow any officer
authorised by the State Government in this behalf to inspect the
in_dustry and verify its records and accounts and furnish such
B
information and returns as may be required by him."

On 10th June, 1992, the State Government issued Goverment Order
No. 214. It stated that under the said Rules as they stood, orders had been
issued that leases be granted to industries which had already been estab- C
lished for cutting and polishing granite and to those who gave a definite
industrial programme to set up such units within the appellant State within
a period of two years from the date of receipt of the letter of commitment.
The Director of Geology and Mining at Madras had reported to the State
Government that illicit mining and transportation was rampant in a number D
districts, that the amount obtained as tender bids for granite leases was
very meagre and that there was an alarming tendency for monopolies to be
created in the granite trade. He had also reported that there was a lot of
wastage in the granite cutting and polishing process. He had suggested that
the State Government should take steps for conservation and proper
utilisation of the non-renewable granite potential available in the appellant E
State with a view to safeguard the interest of future generations and the
public interest at large. Granite was a valuable mineral which earned
valuable foreign exchange. It was a non-renewable mineral. It was, there-
fore, necessary that it should be conserved and properly used without
waste. Considering all these aspects, the State Government had been p
examining the question of streamlining the procedure for utilising the
valuable granite deposits available in the appellant State, and it had
decided that :

"(1) henceforth no lease for quarrying granites on poramboke lands
shall be granted to private persons except those who are holding G
letters of commitment. Fresh leases will be given only to a State
Government company or a corporation owned or controlled by the
State Government;

(2) in respect of quarrying Paradiso, Kashmir, White, Kunnam, H
\

)

446 SUPREME COURT REPORTS (1995) 1 S.C.R.

A Paithur, Bavanur, Block, Blue Granite, Raw Silk and Red Granite,
the lease in ryotwari lands will be granted preferably to a State
Government company or a corporation owned or controlled by the
State Government;

(3) the existing condition that the lessee who has been grar.ted
B permission 'to quarry granite in ryotwari lands should have an
existing industry in Tamil Nadu or distinct Industrial programme
to use the mineral in his proposed industry in Tamil Nadu, shall
be dispensed with;

(4) all trade relating to granite shall.be canalised through the Tamil
c Nadu Minerals Ltd.

A notification amending the said Rules was appended to the said Govern-
ment Order and, so far as is material for our Pll:rposes, it amended Rule
19A and introduced Rules SB and 198. Rule 19-A, as amended, read thus:
D
"19-A Quarrying lease for quarrying black, pink, red, grey, green,
white or other coloured or multi-coloured granites or any other
rock required for use for decorative and ornamental purposes in
ryotwari lands, - Notwithstanding anything to the contrary con-
tamed in section III to these rules the authority competent to grant
E quarrying lease for quarrying black, pink, red, grey, green, white
or other coloured or multi-coloured granites or any other rock
required for use for decorative and ornamental purposes in ryot-
wari lands shall be the State Government. The application shall be
in the form specified in Appendix VII to these rules :
F
The said application shall be accompanied by a mining dues
clearance certificate issued by the District Collector concerned in
the Form prescribed in Appendix VIII. Receipt of the application
made under this rule shall be acknowledged by the District Col-
lector or the Officer authorised by the District Collector in this
G behalf in the Form prescribed in Appendix IX to these rules :

Provided that on and from the 10th June 1992 the State Govern-
ment in granting quarrying lease for quarrying the following minor
minerals in ryotwari lands, shall give preference to a State Govern-
H ment Company or a Corporation or Company owned or controlled
STATEv. M.P.P. KAVERYCHETTY[BHARUCHA,J.] 447

by the State Government, namely :- A
(a) Paradiso - (Gnessic Rock with violet colour wavy pattern)

(b) Kashmir White - (Leptynite white granite with garnet spees)

(c) Kunnam, Paithur, - Black granite fine and medium B
Bavanur Black grade with brown background.

(d) Blue Granite - Charnockite with blue background

(e) Raw Silk - Leptynite with yellow background.
c
(t) Red Granite - Porphyritic granite and granites with red
background.

Provided further that the quarrying lease holder for quarrying the
above mineral shall remove or transport the mineral from the
specified land after payment of area assessment, seigniorage fee D
or dead rent whichever is higher, at the rates prescribed from time
to time in Appendix II to these rules and after obtaining transport
permit from the District Collector or the Officer authorised by him
in this behalf :
E
Provided also that the lessee shall keep correct accounts showing
the quantity of the minerals quarried and shall allow any office
authorised by the State Government in this behalf to inspect the
quarry and verify its :records and accounts and furnish such infor-
mation and returns as may he required by him.
F
It was the first proviso in Rule 19A as amended which was under
challenge and was struck dowp. by the High Court. By reason thereof, the
State Government was obliged to give preference to State Government
companies and corporations in granting quarrying leases for the varieties
of granite set out therein.
G
The High Court found that the first proviso in Rule 19A did not
contain any guideline in the matter of giving preference to a State Govern-
ment company or corporation. The grant of preference was left to the
unfettered discretion of the State Government. It was, therefore, ultra Vires
the Constitution. H
448 SUPREME COURT REPORTS (1995] 1 S.C.R.

A L~arned counsel for the appellant State drew our attention to t~e
judgment of this Court in State of Tamil Nadu v. Hind Stone etc., (1981] 2
S.C.R. 742. The High Court of Madras had struck down Rule 8C of the
said Rules as it then read. Rule 8C stated that on and from 2nd December,
1977, no lease for quarrying black granite would be granted to private
B persons and that the State Government itself could engage in quarrying
black granite or grant leases for guarrying black granite in favour of any
State Government corporation. This Court referred to the declaration
made under section 2 of the said Act, which states that "it is expedient in
the public interest that the Union should take under its control the
regulation of mines and the development of minerals" to the extent
C provided in the said Act. The public interest, this Court said, which
induced Parliament to make this declaration had to be the paramount
consideration in all matters concerning the regulation of mines and the
development of minerals. Parliament's policy was clearly discernible from
the provisions of the said Act. It was the conservation and the prudent and
D discriminating exploitation of minerals with a view to secure maximum
benefit to the community. There were clear sign posts to lead and guide
the subordinate legislating authority in the matter of making rules. It could
not be said, having regard to the provisions of the said Act, that the rule
making authority had exceeded its power in banning leases for quarrying
black granite in favour of private parties and in stipulating that the State
E Government itself could engage in quarrying black granite or grant leases
for quarrying black granite in favour of any State Government corporation.
To view such a rule as a rule to benefit the State Government, the
subordinate legislating body, was to take too narrow a view o.f it~ functions.
If in the pursuit of the avowed policy of the Act it was thought that
F exploitation by the public sector was best and wisest in the case of a
4-
particular mineral, the authority competent to make the subordinat.: legis-
lation could make a rule banning private exploitation of such mineral,
which had hitherto been permitted. In the case of a scarce mineral the most
effective method of conservation and prudent exploitation was to permit
exploitation by the State or its agencies and to prohibit exploitation by
G private ageneies. "If', the Court said, "you want to conserve in the future
you must prohibit in the present. We have no doubt that the prohibiting of
leas~ in certain cases is part of the regulation contemplated by section 15
of the Act." .

H. That valid differentia exists between State Government companies
STATEv. M.P.P.KAVERYCHETIT[BHARUCHA,J.) 449

and corporations on the one hand and private miners on the other hand A
that it bears close nexus to the object of the said Act is not in serious
dispute. With the object of conserving a rare and precious mineral and
ensuring its exploitation in the best possible manner, it is open to the State
Government, the rule making authority in respect of minor minerals under
section 15 of the said Act, to keep mining operations in granite of the kind B
specified in the amended Rule 19-A, so far as is possible, in its own hand$,
and to do this by giving preference in the grant of quarring leases for such
l,.,- granite to State Government companies or corporations.

The principal challenge to the first proviso in Rule 19-A was that it
was arbitrary in that it conferred no guidelines in the matter of giving c
preference to State Government companies or corporations. In this con-
nection attention was invited by learned counsel for the appellant State to
Appenex X to the said Rules. Appendix X sets out the form of the
application for a quarrying permit, to be made in accordance with the
provisions of Rule 3. The applicant is required to state, inter alia, whether D
he or it is an individual or a firm or a company. The applicant's nationality
or place of registration or incorporation is to be set out, as also his or its
profession or nature of business. The form requires the applicant to state
whether it has filed an affidavit, as required by Rule 3, that no mining dues
are outstanding in its name. It is also required to state whether it has E
previously worked the mineral in the area in which it seeks the permit, the
quantity that it seeks to remove and the period during which it will be
quarried and transported. It is required to state the purpose for which the
mineral is to be used. Such guidelines as are required, it was submitted,
are furnished by the form, read with rule 3. Quite clearly, preference to a
State Government company or corporation must be given, all things bein:g
F
equal having regard to the various factors in respect of which information
is sought by the aforesaid form. These are the guidelines in this behalf.

It was submitted by learned counsel for the respondents that the
Government company or corporation was free to apply for one piece of G
land but not another and that the said rule should have provided guidelines
for the State Government company or corporation in this behalf. It is
difficult to see how a Government company or corporation can be bound
down by guidelines provided by the said Rules. As commercial undertak-
ings, they would be guided by commercial considerations, and it must be H
450 SUPREME COURT REPORTS [1995] 1 S.C.R. ,._
A assumed that they would act bona fide.
~
It was submitted that Rule 19A as amended had no nexus to the
objects stated in G.O. No. 214 quoted above. This submission is not well
founded. The State Government would be better able to control the mining
of the granite mentioned in the amended Rule if it was in the hands of a
B State Government company or corporation. It was so held in the Hind
Stone case cited above.
,.1
It was submitted that under Rule 19-A as it stood before 10th June,
1992, applicants who qualified to be granted quarrying leases were those
c who had an existing polishing unit or a distinct industrial programme to set
up one. Many private persons had set up polishing units on the basis of
this policy and had applied for quarrying leases. In the meantime, Rule
19A was amended, and these persons had suffered great hardship. The
amendment of Rule 19-A to give preference to State Government com-
D panies or corporations was detrimental to such persons. It was arbitrary
and, applying also the principle of promissory estoppel, ought to be struck
down. Rule 19-A as it read prior to its amendment on 10th June, 1992, has
already been quoted. There is no promise or representation therein; the
principle of promissory estoppel is, therefore, not attracted; nor can it be
E said that there is any arbitrariness in the State Government's decision to
alter its policy in regard to the mining of granite having regard to its
- perception, from time to time, of the need to conserve it.

Learned counsel for the respondents submitted that granite was a
major as also a minor mineral, depending upon its end use; if it was used
F for industrial or engineering purposes it was not a building stone and could
not be treated as a minor mineral. Under the provisions of Section 15 of
the said Act the State Government has power to make rules for regulating
the grant of quarry and mining leases only "in respect of minor minerals".
i:--
The said Rules are, therefore, only in relation to minor minerals. The
G applicants that we are here concerned with are those who desire to quarry
minor minerals. Tlie submission, therefore, has no relevance to the validity ...i_
of Rule 19A.

Learned counsel for the respondents submitted that under the first
H proviso of Rule 19A the consent of the owner of the land was not made a
STATEv. M.P.P.KAVERYCHETTY[BHARUCHA,J.) 451

condition and it was bad in law on that account. The submission does not A
take note of section 24A of the said Act. Thereunder the holder of a mining
~ lease under the said Act or rules made under it is empowered to enter the
land on which the lease has been granted and carry out mining operations.
He is obliged to compensate the land owner for any loss or damage that
his operations may cause. Consent of the occupier is required only when B
the holder of the lease desires entry into any building or enclosed court or
garden.

The provisions of section 17A(2) of the said Act were adverted to
and it was submitted that they were being circumvented by the first proviso
of Rule 19A. Section 17A(2) reads thus : C

"The State Government may, with the approval of the G!ntral
Government, reserve any area not already held under any
prospecting licence or mining lease, for undertaking prospecting
or mining operations through a Government, company or cor- D
poration owned or controlled by it or by the Central Government
and where it proposes to do so, it shall, by notification in the
Official Gazette, specify the boundaries of such area and the
mineral or minerals in respect of which such areas will be
reserved."
E
Section 17A(2) applies when an area is sought to be reserved by the State
Government for undertaking mining operations exclusively through a
Government company or corporation. When such area is notified the
mineral or minerals in respect of which it is not notified must also be stated.
Such reservation cannot be made without the approval of the Central F
Government. The first proviso of Rule 19A does not wholly exclude private
parties from obtaining quarrying leases for such leases preference &hall be
given to State Government companies and corporations. Where, therefore,
there are, for the same mining lease for the specified minerals rival
applications, all things being equal having regard to the requirements of
Rule 3 and of the form at Appendix X, a State Government company or G
corporation is to be preferred. The first proviso to Rule 19A cannot,
therefore, be said to circumvent the provision of section 17A(2).

The provisions of the amended rule 19-A have not been attacked on
grounds other than those set out above. We find no substance in the attack. H
452 SUPREME COURT REPORTS (1995) 1 S.C.R.

A We are of the view that the High Co_urt was in error in holding that the
first proviso in Rule 19-A was ultrfl vires the Constitution.

Rules BD and 19B: -----

Rules 8D and 19B were introduced into the said Rules by Govern-
B ment Order No. 214 dated 10th June, 1992. The two Rules are identical,
except that Rule 8D is in Section II which relates to G wernment lands in
which the minerals belong to the Government and Rule 19B is in Section
III which relates to ryotwari land in which the minerals belong to Govern- .---
ment. This being so, it is enough to quote Rule 19B. It reads thus :
-...1
c "19-B. Constitution of black, red, pink, grey, green, white or other
coloured or multi-coloured granites or any rock suitable for use as
ornamental and decorative stones quarried by the permit holder,
etc. -

D (1) Notwithstanding anything contained in these rules, on and from
the 10th June, 1992 the sale of the quarried black, red, pink, grey,
green, white or other coloured or multi-coloured granites or any
rock suitable for use as ornamental and decorative stone by every
permit holder who has been granted permission by the State
Government and every person who has been permitted by a com-
E petent court having jurisdiction, for quarrying black, red, pink,
grey, ween, white or other coloured or multi- coloured granites or
any rock suitable for use as ornamental and decorative stone, shall
be regulated by the State Government or by an Officer of the State
Government or by a State Government company or by a corpora-
F tion owned or controlled by the State Government, as the State +--
1-
Government may direct in this behalf.

(2) Where the above sale is regulated by-

(i) The State Government or by an Officer of the State Govern- ..._
G ment, the minimum price shall be as fixed by the State I-
Government;
~
(ii) The State Government Company or a corporation owned or
controlled by the State Government, the minimum price shall
H be as fixed by the said company or corporation, as the case
STATE v. M.P.P. KAVERY CHETTY [BHARUCHA, J.] 453

may be: A
Provided that in fixing the minimum price under this sub-rule,
the fair market price prevailing at the time of the sale shall be
taken into account."

On the same day that Rules 80 and 19B were introduced, that is, B
10th June, 1992, Government Order No. 216 was also issued. It directed,
under the provisions of the two Rules, that the Tamil Nadu Minerals
Limited, a State Government Company, would regulate the sale of quarried
black, red, pink, grey, green, white or other coloured or multi-coloured
granite or any rock suitable for use as ornamental and decorative stones. C
The High Court quashed Rules 80 and 19B principally on the
ground that Section 15 of the said Act gave no power to the State Govern-
ment to frame rules to regulate internal or foreign trade in granite after it
had been quarried. Section 15 also did not empower the State Government
to frame rules to enable a State Government company or corporation to D
foe a minimum price for granite.

Learned counsel for the appellant State submitted that Rules 80 and
19B were valid having regard to the Preamble of the said Act and Section
18 thereof. He submitted that the rule making power of the State under E
Section 15(o) was wide enough to encompass Rules 80 and 19B.

The said Act is enacted to provide for the regulation of mines and
the development of minerals under the control of the Union. Section 2 of
the said Act declares that it is expedient in the public interest that the
Union should take under its control the regulation of mines and the p
development of minerals to the extent provided in the sai? Act. Section 13
empowers the Central Government to make rules for regulating the grant
of prospecting licences and mineral leases in respect of minerals and for
purposes connected therewith. Sub-section (1) of section 15 empowers the
State Government to make rules for regulating the grant of quarry leases,
mining leases and other mineral concessions in respect of minor minerals G
and for purposes connected therewith. Sub-section (lA) of section 15
states that such rules may provide for the matters set out therein, nemely,
the person by whom and· the manner in which an application for a quarry
lease, mining lease and the like may be made; the fees to be paid therefore;
the time and the form in which the application is to be made; the matters H
~-
}

454 SUPREME COURT REPORTS (1995) 1 S.C.R.

A which are to be considered where applications in respect of the same land
are received on the same day; the terms and conditions on which leases
may be granted or regulated; the procedure in this behalf; the facilities to
be afforded lo lease-holders; the fixation and collection of rent and other
charges and the time within which they are payable; the protection of the
rights of third parties; the protection of flora; the manner in which leases
B may be transferred; the construction, maintenance and use of roads, power
transmission lines, etc. on the land; the form of registeres to be maintained;
reports and statements to be submitted and to whom; und the revision of
any order passed by any authority under the said Rules. Clause (o) of
sub-section (lA) reads, "any other matter which is to be or may be
C prescribed." Section 18 of the said Act states that it shall be the duty of the
Central Government to take all such steps as may be necessary for the
conservation and systematic development of the environment by preventing
or controlling any pollution which may be caused by prospecting or mining
operations.
D Rules 80 and 19B empowers the State Government or its officers or
a State Government company or corporation as the State Government may
direct to control the sale by every permit-holder of quarried granite or
other rock suitable for ornamental or decorative purposes. They also
empower the State Government or its officers or a State Government
E company or corporation; as the case may be, to fix the minimum price for
the sale thereof. The object, as is shown by the terms of Government Order
No. 214 dated 10th June, 1992, quoted above, is to conserve and protect
granite resources.

p It is difficult to see how granite resources can be protected by
controlling the sale of granite after its excavation and fixing the minimum
price thereof.

There is no power conferred upon the State Government under the
said Act to exercise control over minor minerals after they have been
G excavated. The power of the State Government, as the subordinate rule
making authority, is restricted in the manner set out in Section, 15. The ~
power to control the sale and the sale price of a minor mineral is not
covered by the terms of clause (o) of sub-section (lA) of Section 15. This
clause can relate only to the regulation of the grant of quarry and mining
H leases and other mineral concessions and it does not confer the power to
STATEv. M.P.P. KAVERY CHETTY [BHARUCHA, J.] 455

regulate the sale of already mined minerals_. A
In our view, therefore, the· High Court was clearly right in striking
down Rules 8D and 19B as being beyond the purview of the rule making
power of the State Govenment. These Rules having been struck down, the
High Court was also right in striking down Government .Order No. 214 to
the extent that it prescribed these Rules and Government Order No. 216 B
made in pursuance of these Rules.

- In the result, these appeals succeed in part. The judgment and order
of the High Court is set aside in so far as it holds that Rule 19A as amended
by Government Order No. 214 dated 10th June, 1992, ·is bad in law. The C
judgment and order of the High Court is affirmed in so far as it holds that
Rules 8D and 19B are bad in law. It is affirmed also in so far as it holds
that Government Order No. 214 dated 10th June, 1992, in so far as it .
prescribes rules 8D and 19B, and Government Order No. 216 dated 10th
June, 1992, arc bad in law.
D
There shall be no order as to costs.

A.G. Appeals disposed of.